What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a form of debt relief intended to help honest individuals get a fresh start by discharging most debt. It is the most common form of bankruptcy. Chapter 7 bankruptcy is sometimes called “liquidation bankruptcy” because certain assets may be liquidated to repay creditors. However, chapter 7 bankruptcy is more commonly known as “fresh start bankruptcy” because the majority of debt discharged when filing chapter 7 is wiped clean without repayment or the liquidation of assets.
Should I file for bankruptcy?
If you are burdened with extensive debt, filing chapter 7 bankruptcy in NYC may be an ideal form of debt relief. With chapter 7 bankruptcy your unsecured debt, such as personal loans, medical bills, or credit card debt is discharged, or wiped clean, giving you a fresh start towards a bright financial future. Chapter 7 bankruptcy is especially helpful if you are being harassed by collections agencies, having your wages garnished, or have a judgement issued against you.
Benefits of Filing Chapter 7 Bankruptcy in NYC
- Become Debt Free!
- Find Relief from credit card debt, personal loans, or medical bills
- Stop wage garnishment and collection efforts
- Discharge your debt in as little as 3 months
- Keep your property through legal exemptions
- Improve your credit score and eligibility for loans in the future
Is filing for Bankruptcy a Bad Idea?
No. For some people, bankruptcy can be a very good thing. Bankruptcy protection is an important tool for the stability of our economy and the well-being of hard working individuals who become overwhelmed with debt. When clients file for Chapter 7 bankruptcy protection, they are taking productive steps to overcome difficult times.
Unfortunately, there is a stigma associated with bankruptcy that prevents many responsible adults from seeking debt relief through this legal channel. Much of the stigma associated with bankruptcy is founded on myths and falsehoods. If you are drowning in seemingly insurmountable debt, filing for chapter 7 bankruptcy may be the most responsible, effective, and prudent strategy for resolving your financial situation.
Filing for bankruptcy may not always be your best option, but for many individuals, filing for chapter 7 is their best route. For those people, hiring a bankruptcy attorney to guide them through the process and protect their property from being liquidated is most likely the smartest, safest, and in the long run, least expensive way to file.
Will filing for Bankruptcy get rid of all my debt?
Chapter 7 discharges (gets rid of) most unsecured debt. This is why it is commonly referred to as “fresh start” bankruptcy. Once you have filed for bankruptcy, the courts will discharge your debt. You are no longer responsible for that debt.
Will I lose my assets if I file chapter 7 bankruptcy?
Filing for chapter 7 Bankruptcy will cause the liquidation of nonexempt assets by the United States Trustee. The bankruptcy trustee will evaluate and sell off the debtor’s nonexempt assets to pay off creditors. An experienced bankruptcy attorney can help you claim exemptions on the majority, if not all of your assets during the liquidation process. This can protect a person’s car and home, and other important possessions.
- Cash, U.S. savings bonds and tax refunds up to $12,625 (exemptions double if filing jointly)
- Household furniture up to $12,625
- All wearing apparel up to $12,625
- Appliances and household goods up to $12,625
- Equity in a motor vehicle up to $3,775
- Equity in a house, condo, or co-op up to $165,550.00 ($331,000.00 for spouses filing jointly)
- Most pensions and retirement plans
There are several more exemptions in New York and some valuables can be exempted using multiple exemptions, increasing the amount of protection. One example would be a married couple filing jointly could potentially protect $32,800 of equity in a car. Just because something is not completely protected does not mean that you will lose it. You can often buy items back from a trustee and in many cases a trustee will abandon items that are not worth selling.
How much does bankruptcy cost in NYC?
How much your Bankruptcy costs depends on several factors: filing fees, fees for mandated education courses, fees for acquiring the necessary information for filing (such as credit reports) and preparation/representation fees.
Additional fees for completing a mandatory credit counseling course and a debtor education course add to the overall cost of filing for chapter 7 bankruptcy in NYC.
Debtor Education and Credit Counseling courses cost between $0 to $500, depending on where the course is taken. Some chapter 7 filers take free online courses, however some bankruptcy attorneys in NYC are known to charge unsuspecting clients up to $500 by including the courses in their overall fee. At the law offices of William Waldner, clients are offered various options for taking these courses, most of which range between $15 to $25 per course.
An extensive credit report is critical when preparing a consumer bankruptcy petition.
Many attorneys try and save money by using a basic 2-bureau credit report. This is risky, because simple credit reports leave out important debts that must be included in the paperwork for filing chapter 7 bankruptcy. To ensure clients receive the most helpful credit report for filing bankruptcy, William Waldner provides an ultra-comprehensive 3-bureau credit report as well as a thorough public records search. This report is undoubtedly one of the absolute best when filing for chapter 7, however it can be a very expensive. Mr. Waldner does not charge clients for this service, and individuals who are represented by him receive this extensive credit report free of charge.
The bankruptcy cost associated with representation and preparation depends on whether you file pro se (without an attorney), with an attorney or pay a petition preparer to prepare your paperwork.
If you are looking for the cheapest way to file for bankruptcy, you can file pro se or without an attorney. If you prepare your own paperwork the process is free. If you have a petition preparer your case will not be free. Ironically, individuals who try and save money by filing for bankruptcy by themselves or hiring a “Bankruptcy Petition Preparer” often encounter unforeseen fees, lost assets, and debts that are not discharged by the courts, which cost far more than an attorney’s fee.
How Does Chapter 7 Bankruptcy Work in New York?
In order to file chapter 7 an individual must meet specific qualifications laid out by the state of New York.
Before filing for bankruptcy, you should determine if you are eligible for filing under chapter 7. This is best done during a free consultation with a bankruptcy lawyer, but in summary, the ideal candidate for chapter 7 bankruptcy should:
Chapter 7 Bankruptcy Process ;
How to File Chapter 7 Bankruptcy in NYC
With a reputable bankruptcy lawyer, filing chapter 7 is a relatively simple process, typically lasting between 3 and 6 months from start to finish. Chapter 7 bankruptcy is not available to everyone.[/fullwidth_text]
Bankruptcy is a legal process. As with most legal processes, individuals who do not have adequate experience and knowledge with the specific process should hire legal counsel. That’s why most individuals filing for bankruptcy hire a bankruptcy attorney as their first step. While retaining a lawyer is not necessary to file bankruptcy, it is highly recommended to ensure you file out the correct forms with the correct information. Not doing so can imperil your chances of becoming debt free. Bankruptcy lawyers can also help protect your personal property from being liquidated. In the vast majority of cases, individuals who are represented by bankruptcy lawyers do not lose any of their property.
Before an individual files for chapter 7 bankruptcy they must complete credit counseling from a court approved agency. If you retain William Waldner as your bankruptcy attorney he will connect you with a credit counseling agency.
This is the most complicated step when filing for chapter 7 bankruptcy and the part where having a good bankruptcy lawyer can really help. In order to file for chapter 7 bankruptcy you must prepare a Voluntary Petition, schedules, and numerous other forms that detail you income and expenses, debts, exempt property, creditors, and other information. Those forms must then be filed with the bankruptcy court clerk.
Once you have filed a voluntary petition with the court an automatic stay is put on your creditors, immediately halting creditors from trying to collect from you.
The stay on collection efforts includes:
- Utility shutoffs
- Lawsuit judgments
- Wage garnishments
- Other type of collection efforts.
The court appoints a trustee to oversee your case. The trustee takes control of your nonexempt property and could potentially liquidate it to compensate your credits as much as possible. The trustee will also examine your forms to make sure everything is correct.
The trustee will schedule a creditor’s meeting that you will need to attend. You may be asked questions about your financial situation. Typically creditors don’t bother to attend these meetings.
Chapter 7 bankruptcy FAQ
After filing you are a better bet to creditors because there is no one else you owe money to. Because of the financial recession started in 2008, many financial responsible people were forced to file bankruptcy. With chapter 7 being more common, lenders are not as wary of lending to someone with a chapter 7 discharge on their credit score as they use to be.
Learn more by reading: Do I Get to Keep My House and Other Assets in Bankruptcy?